The popularity and understanding of Bitcoins and Blockchain companies have risen dramatically in the past several years. However, there is still a lot of mystery surrounding this industry. Regulations have failed to keep up with these advances in technology, and the design of both considered how each could bypass regulation. By doing so, Bitcoin and Blockchains are able to create more efficient payment networks than traditional banking systems, while reducing oversight. Major debates regarding the value and future of Bitcoin and Blockchains focus on the challenges the two face, in regards to governance. These are the top five challenges facing Bitcoin and blockchain governance.
Network members are placing trust in a decentralized network instead of a singular institution or entity. This is occurring as Bitcoin and Blockchain shift far away from the traditional ways of storing data, currency, and investing. Coming to terms with loss of control can be deeply unsettling is the root of challenges facing the growth and positive governance of Bitcoin and Blockchain companies.
As previously mentioned, trust must be placed in a decentralized network, the bypassing of regulation, and the encryption of data leaves buyers and sellers with little protection against fraudulent sells, exchanges, and products. If Bitcoin and Blockchain companies could manage to find a way to work with already existent regulations or develop regulations that offer users some form of legal say or power, much of the risk associated with the cryptocurrencies and networks could be lessened.
Cost & Efficiency
As Blockchain companies, networks, and those using Bitcoins focus on proof-of-work in the network instead of trusting participants, the cost connected to validating and sharing of transactions on the public ledger are extremely high. Each sector is essentially performing multiple functions of encryption and translation. This requires a critical mass of nodes that undermines the efficiency of the system at times and creates higher costs. With the risk as high with investment in cryptocurrencies and Blockchain companies, some form of governance to aid in the protocol of the validation and sharing of transactions on the public ledger would enhance the benefit of buy and trading Bitcoin and other such cryptocurrencies.
The structure in and of itself relies on not allowing one entity to have the power or information. However, Bitcoin, as an example, has leaders that create and “improve” the governing structure of the trade of Bitcoin. Within the structures of Blockchain companies, business are creating multiple levels of Blockchains within one company. As a result, this complicates the structure and decentralization of power. This lack of structure prevents proper organization and creates complicated networks lacking proper governance to protect buyers and sellers.
Security & Privacy
Perhaps the most common or most voiced concerned is the lack of governance in the realm of security and privacy. The value of Bitcoins can be stored in a multitude of ways. However, little can be done from the legal perspective regarding the protection of value and Bitcoin assets. To that same tune, Blockchain companies have yet to develop a protocol of governance regarding the right to privacy of data before shared and ownership of information. All involved in the exchange of Bitcoins or support of Blockchain companies risk exposure and theft.